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5 Liability of Lenders as Fiduciaries

From: Principles of Lender Liability

Parker Hood

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved.date: 20 October 2021

Subject(s):
Money and the conflict of laws — Banker-customer relationship — Banker-customer contract — Regulatory liability of lenders — Remedies for lenders’ breaches — Financial Services and Markets Act 2000 — UK Financial Services Authority (FSA)
5.01 Ordinarily, a lender, when dealing with a customer, is required to be honest, reasonably careful and discreet (in relation to the details of the customer’s account), but, apart from when it is acting as an agent for the customer, such as when paying or collecting cheques, it does not have to subordinate its interests to those of its customer, ie a lender will not normally be under a fiduciary obligation to a customer.2 This is because the relationship is a commercial one, founded in contract,3 ie it is an arm’s length relationship. However, the changing...
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